Blockchain Bites: Crypto’s Bailout Millions, Brazil’s Binance Ban, Lightning’s Bug

Blockchain Bites: Crypto’s Bailout Millions, Brazil’s Binance Ban, Lightning’s Bug

At least 75 crypto and blockchain firms received approximately $30 million in government-backed PPP loans during the COVID-19 economic crunch while Binance continues to donate personal protective equipment equipment through its charitable wing. Here’s the story: You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here.  Top shelfCrypto LoansMore than 75 companies in the blockchain and cryptocurrency industry collected at least $30 million from the Paycheck Protection Program (PPP), a program meant to provide loans to small businesses affected by the COVID-19-led economic fallout, CoinDesk has found. According to information published Monday by the U.S. Small Business Administration, loan recipients include Zcash developer Electric Coin Company, Ethereum venture studio ConsenSys and several crypto venture firms.  Binance: Wins and LossesBinance, the world’s biggest crypto exchange by trading volume, has donated 27,000 KN95 masks worth more than $60,000 to the U.K. National Health Service’s Pru Trust. Binance Charity recently created the PPE Token stablecoin, which has been used to track the delivery of masks and other equipment to hospitals. That’s as the exchange acquired crypto wallet app Swipe.io. Swipes wallet is available in more than 30 countries and allows users to purchase items with crypto via a Visa debit card. In less positive news, the Brazilian Securities and Exchange Commission (CVM) on Monday ordered Binance to immediately cease offering derivatives trading in the country.  Lightning BugResearchers at the Hebrew University of Jerusalem have detailed vulnerabilities in Bitcoin’s Lightning Network that could lead to a loss of funds. The attack, explained in a paper called “Flood & Loot: A Systemic Attack on the Lightning Network,” games the slow confirmation times on Bitcoin’s network, Lightning’s “hash time-locked contracts” and the difference in settlement times.  Benz on the Blockchain?Ocean Protocol has completed a proof-of-concept with Mercedes-Benz maker Daimler, showing how blockchain can begin monetizing data streams within the company and across its supply chains. Announced Tuesday, the Singapore-based Ocean collaborated with Daimler AG to explore the decentralized sharing of internal sales and financial data among the multinational’s production hubs, and externally between some of its supply chain procurement partners.  Mining DisclosuresIran’s vice president issued a directive Monday that states crypto miners in the nation will have to disclose their identities, the size of their mining…

Bitcoin News Roundup for July 7, 2020

Bitcoin News Roundup for July 7, 2020

With BTC beating precious metals, Ethereum rising and a new report out on a lightning network vulnerability, CoinDesk’s Markets Daily is back for your Bitcoin news roundup! Bitcoin showed its luster during the first half of 2020 amid mediocre returns from precious metals. The number of active ether addresses just clocked a recent high, possibly thanks to its growing role in decentralized finance. Computer scientists Jona Harris and Aviv Zohar have examined the Lightning Network’s “flood and loot” attack that preys on Bitcoin network congestion.  Ocean Protocol has completed a proof-of-concept with Daimler, showing how the Mercedes-Benz maker can begin monetizing data across its supply chains. Brock Pierce has formally filed to run for president of the United States. DisclosureThe leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

FATF Plans to Strengthen Global Supervisory Framework for Crypto Exchanges

FATF Plans to Strengthen Global Supervisory Framework for Crypto Exchanges

The Financial Action Task Force (FATF), whose advice is heeded by more than 200 countries, will meet in October to discuss ways to create a stronger global framework for the regulation of cryptocurrencies. UPDATE (July 7, 16:55): This article has been updated to include comment from Siân Jones. DisclosureThe leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Gelato Gives Developers a New ‘Money Lego’ Tool for DeFi Applications

Gelato Gives Developers a New ‘Money Lego’ Tool for DeFi Applications

A new decentralized finance (DeFi) “money Lego” will allow app developers to make it possible for users to automate their transactions. Called Gelato, the protocol moved from alpha to a live and audited v1 on Ethereum’s mainnet on July 3. And, according to a blog post shared early with CoinDesk, decentralized exchange (DEX) Gnosis will be the first major platform to integrate Gelato, allowing users to swap and withdraw tokens in a “seamless Uniswap-like UX.” “It’s a network that transacts on behalf of users or even dapps themselves, based on some conditions, like price or the collateralization ratio of a debt position,” Gelato co-founder Hilmar X. Orth told CoinDesk.  In short, the project gives developers simple infrastructural pieces to plug DeFi into decentralized applications (dapps).  Gnosis did not return requests for comment by press time. Blockchains do not easily lend to trading without a little tech wizardry. They are slow and expensive to keep up, and users must bid against one another to record a transaction on the ledger. Regardless of the difficulties, DeFi projects have attempted to build a new financial system on top of blockchains because of their other valuable features, namely their permissionless nature. The Ethereum blockchain has been a common choice for DeFi – quickly approaching $2 billion currently “staked,” or pledged, as collateral – for numerous reasons, mostly boiling down to Ethereum’s rich programming language which makes building projects easier. Money Lego are tech stacks that allow different applications to fit (or be shoved) into other projects. For example, you can deposit ether (ETH) into MakerDAO, receive the stablecoin dai (DAI) and then lend it on Compound to a trader in order to earn the network’s governance token COMP. That being said, the infrastructure for connecting these crypto-financial Lego is still being cast. Gelato is just one such project bringing composability to DeFi and dapps, Orth said. “For example, we have a developer building Gelato into his smart contracts, which will withdraw funds from the wallet of his users to his smart contract every month, as an insurance premium payment. If the user then runs out of cash, the insurance will automatically be cancelled and the claims of the user [will] be burned,” Orth said. Gelato has integrated with data…

Weed Out the Soviet-Era Ponzi Scheme Eating Ethereum

Weed Out the Soviet-Era Ponzi Scheme Eating Ethereum

Lex Sokolin, a CoinDesk columnist, is Global Fintech co-head at ConsenSys, a Brooklyn, N.Y.-based blockchain software company. The following is adapted from his Fintech Blueprint newsletter. We have a beautiful Ethereum garden. In it we grow cash equivalents called stablecoins powering applications that run on open-source, programmable blockchains. It promises to be the new economy – free, permissionless and global. It saw more than $50 billion in transaction volume in June 2020 alone. But there is a hungry weed growing underneath. In our beautiful public garden, there spreads corruption. Can we root out this plant? Can we turn the soil? The weed is called a pyramid scheme, and it always takes advantage of those who feed it. Take a look at the diagram below (from the U.S. Securities and Exchange Commission). After four levels of targets, the scheme needs just 7,000 people to be profitable to the swindlers. After the 10th level, it needs 60 million people. By the 13th level, you must consume 13 billion participants. There is never enough for the weed. “How Pyramid Schemes Work” Source: Securities and Exchange CommissionThe weed can work on any technology, as long as it touches a human mind. You can spread it with words, on paper, by fax or in code. Here is how the weed looks when it’s implemented in software: This academic paper, published in January 2020, traces 184 software implementations of pyramid schemes operating on permissionless networks. There are more now. Maybe you don’t understand how bad this is for the garden. Maybe you think letting this grow and overtake our mutual work is freedom. The strongest survive, the weakest die. See also: JP Koning – The $10B Stablecoin Industry Has a Fraud Problem It’s Not Addressing With that mindset, we would have no delicate flowers or cultivated beauty. All we would have is a desert of dandelions and horseradish. In the world of money and cryptocurrency, there would be no real economic activity, no central bank digital currency, no crypto-native businesses, no new financial infrastructure and no technology platform shifts to blockchain. Just a loud grind of theft guzzling gas fees, crowding out productive activity from Ethereum forever. The weed has a nameLet me introduce you to MMM, a pyramid scheme with roots in the former…

With Chat Privacy Under Threat in US, Firm Develops ‘100% User-Controlled’ Messaging

With Chat Privacy Under Threat in US, Firm Develops ‘100% User-Controlled’ Messaging

As the U.S. moves to pass legislation that threatens to weaken end-to-end encryption, Unstoppable Domains is planning to give users full control over their chat data with a new decentralized protocol. DisclosureThe leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

First Mover: Even Bank of America Acknowledges China Winning Digital-Currency Race

First Mover: Even Bank of America Acknowledges China Winning Digital-Currency Race

China’s push to roll out a digital version of its yuan isn’t likely to end the U.S. dollar’s century-long reign as the dominant currency for international payments and central-bank reserves. But it could make a dent.  That’s the conclusion of foreign-exchange analysts at Bank of America, who argue that a Chinese digital currency might be welcomed by regional trading partners as payments become increasingly electronic. You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here. China appears well ahead of the U.S. in developing a central-bank digital currency, or CBDC, the Bank of America analysts wrote in a June 30 report. Federal Reserve Chair Jerome Powell, who said last year that the U.S. central bank had “not identified potential material benefits” of a general-purpose digital dollar, told Congress in June that officials are “working hard” on the issue.  Yet the Agricultural Bank of China, one of the nation’s four state-owned banking giants, is already trialing a test interface for the digital yuan, CoinDesk reported in April.  It goes without saying that the spread of the coronavirus has inspired a newfound repugnance for germy cash.  “China seems likely to have a clear first-mover advantage in its adoption of CBDCs, both in terms of timing and usage,” the Bank of America analysts wrote. A digital yuan could increase the Chinese currency’s use in international commerce “even if it doesn’t immediately disrupt the USD’s dominant role in global finance.” Source: Bank of AmericaThe advent of digital-asset technologies has combined with the coronavirus-induced economic crisis to raise nagging questions about whether the dollar’s undisputed reign as the de facto global reserve currency might be due for a reckoning. The dollar accounts for some 62% of global central banks’ foreign-exchange reserves.  As reported by First Mover on Monday, the German lender Deutsche Bank wrote in a report last week that a reelection victory by U.S. President Donald Trump could undermine the dollar’s dominant role in the long term, given his willingness to spurn multilateral organizations like the International Monetary Fund and World Bank. …

Ethereum Activity Metric Hits Highest Level for 2 Years

Ethereum Activity Metric Hits Highest Level for 2 Years

Levels of activity on Ethereum have peaked to their highest in two years, going by one metric. The seven-day moving average of the number of active ether addresses rose to 405,014 on Friday – a threshold not seen since May 2018, according to data provided by the blockchain analytics firm Glassnode.  Active addresses are the number of unique addresses that are active in the network either as a sender or receiver. Glassnode takes into account only those addresses that were active in successful transactions. Ethereum active addressesSource: GlassnodeAs of Monday, the seven-day average was down slightly to 390,162. That’s still a 115% growth from the low of 180,750 seen on Jan. 30.  The increased ether activity could be associated with the explosive growth of Ethereum-based decentralized finance (DeFi) platforms, as well as the number of daily tether (USDT) transactions on the network.  At press time, about 3.1 million ether were locked in various DeFi applications, according to data source defipulse.com. Meanwhile, the number of daily USDT – the most used stablecoin – transactions on ether has increased by over 400% this year, as per CoinMetrics.  Also read: DeFi’s ‘Agricultural Revolution’ Has Ethereum Users Turning to Decentralized Exchanges The heightened demand for ether from such use cases is expected by many to fuel a major bull run. So far, however, the cryptocurrency has struggled to decouple from bitcoin, the leading cryptocurrency by market value.  Daily chart: ETH/USD and BTC/USDSource: TradingViewEther, the second-largest cryptocurrency, is moving pretty much in tandem with bitcoin. The ether-bitcoin one-year correlation has risen to 89%, the highest on record, according to crypto derivatives research firm Skew.  Some observers would argue that address growth is not a reliable indicator of adoption, as a single user can own multiple addresses. Crypto exchanges also store coins belonging to traders in multiple addresses.  While that’s true, ether’s active addresses metric is more reliable compared to that of bitcoin. “Active addresses are inflated on bitcoin because of the UTXO model,” tweeted to Anthony Sassano, SetProtocol product marketing manager and co-founder of EthHub, an open-source initiative founded by the Ethereum community.  UTXO stands for unspent transaction output. Under the UTXO model, bitcoin users have to use new addresses with each transaction. Meanwhile, Ethereum uses an accounts model, under…