Month: November 2018

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Throughout 2018, the cryptocurrency market has lost 75 percent of its valuation. Yet, crypto hedge funds are raising hundreds of millions of dollars from accredited investors and institutions.

 

On November 1, CCN reported that Grayscale Investments, a subsidiary company of cryptocurrency venture capital behemoth Digital Currency Group, raised more than $330 million from both existing and new investors.

After recording a 1,200 percent increase in the amount the firm had raised across three quarters in 2017, Michael Sonnenshein, managing director of Grayscale Investment stated that the substantial 69 percent drop in the price of Bitcoin had minimal impact on the company’s client base.

“Bitcoin prices doing nothing but go down the entire year has not deterred our existing clients from putting more capital to work. Asset inflows are really strong despite these price declines. Investors are taking the pullback as an opportunity to increase their exposure. The price has not slowed down the pace of investments — it’s actually caused us to broaden our relationships.”

Not Just Grayscale

As a publicly tradable instrument provider of Bitcoin, Ethereum, Ethereum Classic, and Zcash that allow investors in the stock market to invest in the cryptocurrency market, Grayscale has a strong reputation as a digital asset asset manager and investment firm.

But, over the last several months, other major cryptocurrency hedge funds such as Pantera Capital and former Point72 portfolio manager Travis Kling-founded Ikigai Asset Management have raised over $100 million to invest in the asset class.

The cryptocurrency sector has fallen by a significant margin within a 11-month period, but to many investors exploring the asset class as a long-term investment opportunity, the correction of the market has been considered an opportunity.

Throughout the past 10 years, the cryptocurrency market recorded four major corrections, all of which demonstrated drops of over 80 percent in valuation. Hence, as Travis Kling emphasized, the cryptocurrency market is merely at the start of exponential growth and the correction is a viable opportunity for new investors to enter.

“Same as that earlier invention, I believe crypto will create trillions of dollars along the way. Already the market for virtual coins is valued at hundreds of billions of dollars. And it’s all just getting started. So I left Point72, billionaire Steven A. Cohen’s hedge fund, in December to continue my investing career, but in a new asset class,” Kling wrote on August 1.

In August, Pantera Capital raised more than $100 million and is targeting to raise $75 million more to establish a venture capital-style fund to invest in cryptocurrency startups.

Over 140 investors participated in the $100 million fund of Pantera with a 10-year long-term vision to invest in the cryptocurrency industry and emerging startups rather than cryptocurrenies like Bitcoin and Ethereum.

Market Growth is Strong

Historically, the cryptocurrency market has rebounded strongly from large corrections and consistently achieved new all-time highs.

2018 has evidently shown that cryptocurrency as an asset class is strong and robust, supported by a rapidly growing industry. It is not a fad but rather a newly emerging technology, consensus currency, and computing system that is competing against existing centralized systems.

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IBM has filed a patent for a blockchain-based system which will prevent players of augmented reality games entering physical spaces that are undesirable.

They cite as examples “high-risk locations, culturally sensitive locations, locations marked by property owners.” Augmented reality is a technology which adds layers to physical reality. An example is Zombie GO, an AR game which places zombie in real life or perhaps the most famous example, Pokemon Go. AR can have other applications than games, however, such as displaying historical views of locations.

The aim of the technology IBM seeks to patent is to improve the political and actual use of AR in physical space, in an effort to prevent collisions of AR with locations that are not desirable by either party. An attack vector in location-based AR games is when “actors or users may maliciously profile a location for different purposes (e.g., misleading game players by falsifying the profile of a location where the ARC can be placed).”

IBM Uses Blockchain to Keep AR Players Out of Trouble

Blockchains will be used in the patented system to accurately document information about locations used in such games and systems.

Thus, it is important for the system to verify/validate any location related transaction. Accordingly, the method 300 includes tracking 310 or verifying recommended locations, labels, or tags using a location/label/tag blockchain-based system. The blockchain system securely tracks, stores, and maintains location related transactions along with other location metadata. A blockchain is a distributed database that maintains a continuously-growing list of data records hardened against tampering and revision. It consists of data structure blocks–which hold exclusively data in initial blockchain implementations, and both data and programs in some of the more recent implementations–with each block holding batches of individual transactions and the results of any blockchain executables. Each block contains a timestamp and information (e.g., a hash of a previous block) that links it to a previous block.

The system will also include a neural network which will learn the results of interactions in various locations and record the data in the blockchain used.

Thus, risk prediction can occur based on rules learned by the cognitive neural network from past transactions in the blockchain, for example, a pattern of many user movements combined with discrete results such as incident reports, complaints against users, etc. By running the learned rules on more recent patterns of user movements, it is possible for the cognitive neural network to identify potential risks to users with varying degrees of confidence.

The patent process can be lengthy and it could be years before IBM releases a product based on the new patent. IBM has for years been involved in the blockchain space to varying degrees, targeting mostly enterprise clients, but its involvement in entertainment has been rare.

Featured image from Shutterstock.

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Ethereum co-creator Joseph Lubin-led ConsenSys, the largest blockchain software development firm in the world based in New York, has created three of the most widely utilized Ethereum products over the last several years.

To many new cryptocurrency users and investors, ConsenSys, which houses nearly 1,000 developers, is unrecognized. But, day-to-day users of various blockchain projects are well versed in the work ConsenSys has done to improve the infrastructure of the blockchain ecosystem.

At DevCon hosted in Prague, Czech Republic, ConsenSys founder Joseph Lubin presented the world’s most popular blockchain framework Truffle, node infrastructure Infura, and digital asset wallet MetaMask, often described as TIM by active blockchain users, and the progress the three platforms have made in recent months.

Necessity of Truffle, Infura, and MetaMask to Ethereum

Throughout November, CCN has provided extensive coverage of Truffle, Infura, and MetaMask, and particularly some of the major updates the three projects have released to improve the blockchain ecosystem.

MetaMask released its mobile client featuring a decentralized application (dApp) marketplace that enables blockchain users to easily access newly created dApps launched on top of the Ethereum blockchain network.

After Truffle surpassed one million downloads, Microsoft Azure, the cloud computing network of Microsoft and the fastest growing global open-source project, disclosed that it will be working with Truffle to test and develop Microsoft’s enclave ready Ethereum Virtual Machine, a solution that utilizes secure hardware present in mobile phones to securely transmit information to the blockchain.

“At Truffle we’re excited because the eEVM provides a strong base for future platforms and tools in the enterprise space — tools we’d love to help develop. Microsoft’s strong stance toward interoperability makes this an easy win, and helps make enterprise blockchain developers’ lives easier in the process,” Truffle CEO Tim Coulter said.

At DevCon, Coulter further emphasized that the milestone of achieving one million downloads of Truffle portrays an increase in developer activity in the Ethereum developer ecosystem and many other blockchain projects.

“Since the launch of Truffle, all we wanted to do was make it easier for developers to start creating apps on Ethereum. This milestone shows that we’ve done that for so many within the Ethereum ecosystem. We will continue to do that well beyond the next ten million downloads, across Ethereum and all other distributed ledger technologies.”

Infura, the largest Ethereum node infrastructure developer, surpassed 10 billion requests by clearing transactions and smart contract requests for dApps such as MetaMask.

Ethereum Developer Community is Active

As Ben Horowitz, the co-founder of leading venture capital firm Andreessen Horowitz previously said, the cryptocurrency industry has started to show a level of developer activity that surpasses the Internet in its early development phase.

Continuous progress shown by open-source tool suites, frameworks, and projects such as Truffle, MetaMask, and Infura will accelerate growth in the blockchain developer ecosystem and facilitate increasing demand for blockchain-based systems.

Featured image from Shutterstock.

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Bitcoin on Sunday jumped 2.13 percent against the US Dollar as USD-pegged cryptocurrency tether (USDT) resumed its implosion.

BTC/USD was in a sideways sentiment for most of the weekend trading session. The bearish trendline has capped the upside bias on multiple occasions. Nevertheless, the pair — from the past 8 hou rs to the time of this writing — has persuaded a successful breakout action, breaking the cap mentioned above and forming new intraday highs towards 6464-fiat. At the same time, CoinMarketCap.com is showing a massive drop in Tether value — about 4 percent — mirroring the scenario of the October 15 trading session that prompted a massive upside rally throughout the cryptocurrency market.

BTC/USD Technical Analysis

The breakout action has allowed BTC/USD to retest October 24 high towards 6470-fiat while jumping above the pair’s 100H and 200H simple moving averages. The RSI momentum indicator has also jumped towards a favorable buying area owing to the recent upside volatility. And, the Stochastic Oscillator is already inside its overbought area, awaiting correction.

The BTC/USD price action is also forming a rising channel (the dotted one) as of now, with a particular tendency to treat the lower black-dotted trendline as support. If the pair continues the uptrend, one might check the said ascending dotted support line as a potential reversal target off every near-term downside correction.

Nevertheless, BTC/USD is already in a breakout action following the invalidation of the descending trendline depicted in blue. There could still be a bull trap possibility so placing a stop loss to maintain every long/short trade would be advisable.

BTC/USD Intraday Analysis

We have exited our long position towards 6421-fiat on considerably moderate profits and are now entering a new range defined by the Fibonacci retracement swing from 6032-low to 6810-high. The new range has 6421-fiat acting as a new interim support and 6470-fiat as the intermediate resistance level with a sight towards 6513-fiat as the potential interim resistance.

As usual, we are first entering a long position towards 6470-fiat while maintaining a stop loss 3-pips below the entry point. A break above the said long target would have us open another upside position towards 6513-fiat. In this position, a stop loss order just 3-pips below the entry point will define our risk management strategy pretty well.

Conversely, a pullback action makes the lower dotted rising trendline our most likely support level. That said, we’ll enter a short position towards this said level while maintaining our stop loss 2-pips above the entry point. If the lower trendline gets broken during an extended bearish correction action, then 6300-fiat will become our primary downside target.

Featured Image from Shutterstock. Charts from TradingView.

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Recent times have seen banks hedging their bets or even fully integrating cryptocurrencies. The acquisition and filing of patents is how large organizations truly express their interest in a given field, and Bank of America continues to lead the way, now having secured its latest patent in the blockchain and crypto space, one for “tamper-responsive” remote storage of private keys.

Digital Safe Deposit Box?

According to the patent filing, which was finalized and entered into the record this week but initially filed two years ago, the problem with existing storage methods for private crypto keys is “such devices do not provide for real-time response to such breaches, such that misappropriation of private cryptography keys is prevented.” The patent notes that the vast majority of private keys are stored in regular consumer-grade devices and “susceptible to being misappropriated by an entity that desires to usurp a user’s identity.”

In essence, Bank of America wants to serve as a bank for private keys — a digital safe deposit box, of sorts, with the requisite insurance and backing of a major banking corporation. Such a product is certain to find a gracious market in quick order, and that they have a patent on the idea means they might for an extended period be the only game in town — if they commercialize it.

Novel Tampering Detection

The last bit is the novelty of the device or system, whatever form it takes. Bank of America wants to offer clients the ability to know in real-time when their private keys are being tampered with and to have some method to deal with such events. This invention can serve all types of clients, but one imagines exchanges and other larger clientele who are most frequently the target of hack attempts being the biggest beneficiaries.

The patent describes a system of redundant keys in which the system automatically responds to tamper attempts by deleting the key from the potentially compromised device.

“In specific embodiments of the system, the storage device further includes one or more sensors in communication with the first processor. In such embodiments of the system, the first processor is further configured to, in response to receiving the tamper-related signals from the one or more sensors, delete the one or more private cryptography keys from the first memory.”

It can also perform this function if physical tampering is detected, say a device is stolen:

“In other specific related embodiments of the system, the one or more sensors further comprise at least one of a shock sensor, an acceleration sensor and a temperature sensor, In such embodiments of the system, the first processor is further configured to, in response to receiving the tamper-related signals from at least one of the shock sensor, the acceleration sensor and the temperature sensor, delete the one or more private cryptography keys from the first memory.”

A third such instance where it might ghost a protected key off the client device is when a virus or malevolent code is detected:

“In other specific embodiments of the system, the first processor is further configured to receive the tamper-related signal, from the computing node. In such embodiments of the system, the tamper-related signal indicates that a user has exceeded a predetermined number of attempts of inputting user authentication credentials to the authentication routine.”

According to the patent, users will be required to configure what tamper signals are and how they are processed.

Time will tell what, if any, form this patent will take as a product. Secure storage of private keys remains an important topic in cryptocurrency, especially as the community grows and the number of bad actors increases.

Images from Shutterstock

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