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Balaji Srinivasan, a prominent venture capital investor and the chief technical officer at Coinbase, said that crypto is entering the tech mainstream.

“Sundar Pichai & Sergey Brin’s sons are both mining crypto; Facebook is doing blockchain; Square open sourced some nice cold storage code; Microsoft, Amazon, Google Cloud all have blockchain efforts; crypto is entering the tech mainstream.”

Since early 2018, unreflective of the 73 percent correction in the cryptocurrency market which saw the combined valuation of cryptocurrencies drop from $800 billion to $210 billion, the cryptocurrency market and blockchain sector have shown significant progress in terms of institutionalizing an emerging asset class, improving market structure, and strengthening the underlying technologies of cryptocurrencies.

Increasing Awareness of Blockchain

As a data processing technology, the blockchain enables the segregation and storage of data in a series of blocks in a peer-to-peer process. But, to ensure that bad actors with malicious intent are penalized accordingly for engaging in fraudulent activity, an incentive system in the form of a cryptocurrency is necessary on a blockchain network.

To better understand the necessity, structure, and decentralized nature, an increasing number of institutions, technology conglomerates, and enthusiasts have started to mine cryptocurrencies that support major blockchain networks.

Most recently, CCN reported that Google co-founder Sergey Brin and CEO Sundar Pichai have publicly said their sons have been mining ETH, the native cryptocurrency of the Ethereum blockchain protocol.

Pichai noted that his 11-year-old son understood the concept of Ethereum and consensus currencies better than fiat currency, possibly due to the complexity of connections and centralization involved in the creation, distribution, and operation of fiat money.

“Last week I was at dinner with my son, and I was talking about something about bitcoin and my son clarified what I was talking about was ethereum, which is slightly different. He’s 11 years old, and he told me he’s mining it. I had [to] explain to him how paper money actually works. I realized he understood ethereum better than how paper money works. I had to talk to him about the banking system, the importance of it. It was a good conversation.”

Previously, Fidelity Investments, the fourth largest asset manager in the world with more than $7 trillion assets under management, also mined Bitcoin and Ethereum to grasp the concept of mining and the necessity of cryptocurrencies.

Fast forward one year and five months, Fidelity Investments established Fidelity Digital Assets, providing custody services around the asset class to help institutional investors invest in the market.

Open-Source Revolution

Square, the $30 billion payment giant operated by Twitter CEO Jack Dorsey, has recently open-sourced its code that processes cold storage funds.

As a decentralized and peer-to-peer network, the blockchain is developed and maintained by an open-source group of developers that proposed code changes and improvements on code repositories like GitHub.

Last month, Octoverse reported that Ethereum had become the fifth fastest growing open-source project in the world alongside Microsoft Azure and Spyder.

The rise of cryptocurrencies as a recognized asset class and blockchain technology as one of the core pillars of the fourth industrial revolution has led institutions and individuals to rethink how the global monetary system works and the way information can be processed in a peer-to-peer manner.

Featured Image from TechCrunch/Flickr

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On Monday evening, The New York Times reported that Amazon was finally nearing a decision on where to place its second headquarters. After more than a year of deliberation, the e-commerce giant is reportedly nearing a deal to split HQ2 between New York City, in the Queen’s neighborhood of Long Island City, and Crystal City, Virginia.

In January, soon after Amazon realized its short list of 20 finalists for HQ2, Business Insider’s Leanna Garfield published a story on why New York City would be a horrible choice for Amazon’s second headquarters. Here is why:

In mid-January, Amazon named New York City as one of the top 20 contenders for its second headquarters, dubbed HQ2. The campus is expected to bring 50,000 high-paying jobs to the chosen North American city, and Amazon said it will invest $5 billion in HQ2’s construction.

At first glance, it sounds like a sweet deal. But if HQ2 came to New York, with its influx of tech workers, the campus could exacerbate several problems that already plague the city, including high housing prices, overpopulation, and gridlock — all things Seattle, Amazon’s home, has seen since the company arrived in the late 1990s.

A shortage of housing stock and commercial space

New York City has proposed 26 million square feet across three boroughs as possible sites for HQ2. In response, seven local community organizations signed an open letter to CEO Jeff Bezos listing several concerns, including out-of-state hiring, unaffordable housing, and gentrification.

Their worries about higher rent prices are not unfounded, according to a recent report from real estate website Apartment List. The site made a few predictions about HQ2’s potential impact on housing prices in 15 major cities based on historical home-building statistics and data from the US Census and Bureau of Labor Statistics.

According to the report, the city could see an additional annual rent increase of 0.1% to 0.2% if HQ2 comes to town. Already, the median rent surpasses $3,000 per month. Considering that the average rent in New York City increases around 3.7% annually, HQ2 could cost renter households $1,391 to $2,182 over the next decade.

Sarah Jacobs/Business Insider

In New York, it has been difficult for housing supply to keep up with a quick pace of growth over the past two decades. It’s a similar story in Seattle, where Amazon is the largest property taxpayer and private employer. Since 2000, the area has added 99,000 new jobs, with 30% of them in tech, contributing to a construction boom. Seattle is now the second-highest-paying city in tech, with an average salary of $99,400, according to the tech recruiting company Dice Holdings.

Somewhat unsurprisingly, the growth has made Seattle’s housing less affordable for some longtime residents, who have accused Amazon of perpetuating income inequality in the city. From 2005 to 2015, Seattle’s median rent went from $1,008 to $1,286, an increase nearly three times the national median.

Amazon’s presence could also potentially impact small businesses in New York. In the 2017 book “Vanishing New York,” author Griffin Hansbury wrote that the city is in a state of “hyper-gentrification,” which has culminated in the death of small businesses like mom-and-pop groceries, used book shops, and dive bars. Seattle has seen this as well, and some local businesses say Amazon’s presence makes it more expensive for them to find space.

“Some landlords aren’t even talking to us about (leasing) full floors,” Eric Blohm, a senior managing director for Savills Studley (which represents companies looking for office space in Seattle), told The Seattle Times. “They’re holding out for the full building user. Or they’ll say, ‘Get in line, you’re third in line, we’re talking with other people.'”

The subway system and roads would not be able to handle thousands more Amazon workers

Though New York City is the densest city in the US, the promise of 50,000 jobs is likely to attract even more residents. That could be bad news for the city’s struggling public transit. The city’s subways handle 5.7 million riders every weekday, and 50,000 more people could make a dent, however small.

In 2016, a New York Times investigation also found the city’s s explosive population growth over the last century has been a big contributor to the subway system’s inefficiency. The aging subway faces funding challenges, as well as an impending temporary shutdown of the L Train — a main (and majorly congested) line that travels from Manhattan to Brooklyn — to make repairs for damages incurred by Hurricane Sandy in 2012.

Brian Jeffery Beggerly/Flickr

It’s uncertain whether the city’s subway system and roads could cope with thousands of new Amazon commuters or drivers.

In Seattle, drivers spent an average of 55 hours in traffic in 2016, placing it among the top 10 worst US cities for congestion, according to the most recent analysis by Inrix. In June 2017, Seattle’s metro system even added more buses to accommodate Amazon’s summer interns. In New York City, high-frequency, cross-town bus service is still lacking. In November, the New York City’s comptroller’s office said the bus system is “in crisis,” a reality the city would need to reckon with if HQ2 came.

Worries about the “Amazon effect” on public infrastructure

In a letter to Mayor Bill de Blasio, a coalition of community organizations asked the City of New York to hold Amazon accountable if the company expanded its footprint there. The groups argued that Amazon should invest in public infrastructure, like schools and transit, as well as small businesses if it chooses to come to New York.

“You should focus on pushing Amazon to be a better corporate citizen and improving how it treats communities and workers,” the letter said. “You should also actively work to ensure that this multibillion-dollar company, who already has a significant presence in New York, does not receive financial incentives simply for doing business here. New York communities are facing massive cuts to public goods and services, and working families are struggling to make ends meet.”

Leanna Garfield originally contributed reporting.

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Cybersecurity researchers working for a subsidiary of Japan’s largest bank believe that they have found the hackers who stole $60 million from Japanese crypto exchange Zaif in an attack earlier this year.

MUFG Investigates Zaif Hack

According to a press release published on Monday, Japan Digital Design Co. (JDD) — a subsidiary of banking giant MUFG — partnered with local cybersecurity researchers to monitor the stolen funds as the attackers attempted to move them and, presumably, launder them into fiat currency.

As CCN reported, the Zaif hack occurred in September and saw the thieves abscond with about $40 million in customer funds, along with $20 million that belonged to the exchange. The funds were denominated in bitcoin (BTC), bitcoin cash (BCH), and monacoin (MONA).

The announcement was slim on details, but it stated that it was the latter cryptocurrency — the lesser-known monacoin, whose market cap is just $73 million — that enabled the researchers to accumulate data on the attackers. Apparently, JDD used an array of cloud-hosted MONA nodes to analyze transactions involving the stolen funds and identify clues regarding the identity of the attackers, such as the source IP address.

“Since the Monacoin began moving from October 20, we estimated the source of 5 transactions in question and provided information to the authorities concerning the characteristics of the transaction originator,” JDD said.

“In the investigation of the leaked virtual currency, remittance route has been analyzed through static analysis of the block chain, but with this effort, by deploying the virtual currency node on a large scale after the outflow of the virtual currency, We verified whether we can obtain clues such as source IP address etc. We also got useful data to grasp the accuracy of the information and the cost of tracking,” the release, which was roughly translated from Japanese, said.

Zaif Customers Await Compensation amid Sale of Crypto Exchange

Unlike Coincheck, the Japanese cryptocurrency exchange which lost a record $530 million in a January hack, Zaif was licensed by the country’s Financial Services Agency (FSA), giving the regulatory agency a black eye. Following the hack, the FSA slapped Zaif with a business improvement order and said that it regretted having allowed the exchange to continue operating even after it had received multiple warnings in the past.

Several weeks later, Tech Bureau — the owner of Zaif — announced that it would sell its entire stake in the exchange to Fisco Digital Asset Group, a publicly-listed Japanese company. The terms of the deal, which is scheduled to be completed on Nov. 22, state that Fisco will be responsible for compensating customers who lost funds in the theft.

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A Reddit user has complained that a virtually unknown token is consuming a large amount of Ethereum’s gas supply.

Gas is a measurement of the computational work required to do a given transaction on the Ethereum network. Different smart contracts have different requirements. It is not exactly the same as a transaction fee but it can be viewed as such in terms of economics – when more gas is required, a transaction is, therefore, more expensive. When many transactions are being executed at once, the resources of the network are therefore scarcer, and gas becomes more costly.

A website dedicated to tracking the biggest gas hogs in Ethereum confirms that this contract is using the most gas on the network at present time.

The trouble is, Omniscience Dedication Financial is essentially an unknown quantity. A Mumbai company called Omniscience Capital is found when you search the term, but they have no mention of blockchain products on their site.

What Is Going On Here?

Nothing of value is returned on either Bing or Google. Whoever they are, they’re busy, having conducted more than 72000 transactions within the contract at time of writing. ODF tokens are moving, but it’s unclear what they do, who they are for, or why they exist. The creator of the contract, also unknown, has transacted primarily in two tokens: ODF and CKC, neither of which is assigned a value on venerable site Etherscan. CKC has just 15 holders total.

The ODF token is not currently trading on EtherDelta, which will typically list any token at all. If there were any demand for the token, it’d be trading there, certainly.

All of which begs the question: what is this all about? What is going on here? Are we soon to be surprised by a new “financial” token with some important use case hitting the market and having thousands of holders? Is this the work of a fund or firm working strictly for its clients?

The nature of the public Ethereum blockchain is that anyone can create and launch a token if they please, provided they’re willing to pay for the computing used. In the case of ODF, they appear to have no issue paying for gas, to the detriment of some everyday users. CCN will monitor the situation and report as more details eventually become available on the situation.

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The Swiss Financial Market Supervisory Authority (FINMA) has instructed banks dealing in cryptoassets to apply a risk weighting of eight times their market value  when calculating loss-absorbing capital buffers.

In a confidential letter seen by swissinfo.ch, the regulator also imposed a 4 percent cap on crypto positions as a percentage of total capital held by banks, requiring them to report when they reach the limit.

FINMA’s Skeptical Stance on Cryptocurrencies

While the regulator has so far refrained from taking an official stance on cryptocurrency regulation in Switzerland, the October 15 letter, which was addressed to EXPERTsuisse reveals that pending such a time as the Basel Committee on Banking Supervision makes global recommendations, FINMA wants financial institutions to treat cryptocurrency as a high risk asset class, with a risk weighting touching the upper end of the scale indicating high volatility.

The letter reads in part:

“[Cryptoassets should be] assigned a flat risk weight of 800% to cover market and credit risks, regardless of whether the positions are held in the banking or trading book”.

While bitcoin and other cryptoassets appear to have lost a large part of their notorious volatility over the past few months with bitcoin remaining at or around $6,000 for  most of 2H 2018, the regulator still believes that cryptoassets are a massive volatility risk.

Under the new regulatory provisions, while bitcoin currently trades at around $6,400, a bank must value it at eight times that amount, or over $50,000 when calculating the risk-weighted worth of its assets. As a result, banks must reserve a larger amount of capital to cover trading losses for cryptoassets compared to other asset classes.

In addition, FINMA has also capped the total amount of crypto trading that a bank can carry out including both long and short positions at 4 percent of its total capital, with a requirement to report when the limit is reached. Even more significantly, the regulator has also stipulated that for the purpose of calculating a bank’s liquidity ratios, cryptocurrencies cannot be classified as highly liquid assets.

Good News for Some

In a surprising twist, the news has come as a boost for a growing number of crypto-focused banks setting up in Switzerland. One of these new banks is SEBA Crypto AG, which recently raised over $103 million to create a seamless framework to merge crypto banking and fiat banking services. Speaking to swissinfo.ch, SEBA CEO Guido Bühler stated that while FINMA’s new guidelines may be relevant to certain institutions and processes involved in cryptoasset handling, they have a “limited impact” on SEBA’s business model.

While FINMA’s instruction to banks indicates a level of regulatory caution, it should be noted that Switzerland is noted for being one of Europe’s friendliest jurisdictions for crypto finance innovation. CCN reported recently that FINMA gave the green light to Zug-based Crypto Finance AG subsidiary Crypto Fund AG to offer a wide range of blockchain-based assets to institutional investors in the country.

In August, CCN also reported that Swiss private bank Maerki Baumman became the second bank in the country after Falcon Private Bank to offer banking services to cryptocurrency firms.

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