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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Blockchain testing and research company Whiteblock Inc. has released a damning verdict on EOS, describing it as a “distributed homogeneous database” masquerading as a blockchain. In a report titled “EOS: An Architectural, Performance and Economic Analysis,” the company dissects several aspects of the EOS protocol and comes to the conclusion that it suffers from a serious security deficiency as well as network performance that is significantly lower than what was claimed.
Extraordinary Findings
According to the report compiled by Whiteblock’s research team made up of Brent Xu, Dhruv Luthra, Zak Cole, and Nate Blakely, EOS has a number of shocking security and protocol failings that fatally compromise many of the use cases suggested for the network once dubbed the “Ethereum killer.”
Over the course of two months since its September launch, the test evaluated the EOS network’s transactional throughput against its claimed capacity. In addition, it also tested its response to adverse network conditions, how it responds to variable transaction rates and sizes, its average transaction completion time, its partition tolerance and its fault tolerance. The results are far from flattering.
In a press release about the EOS test published on November 2, Whiteblock stated bluntly:
“EOS is not a blockchain, rather a distributed homogeneous database management system, a clear distinction in that their transactions are not cryptographically validated. EOS token and RAM market is essentially a cloud service where the network provides promises for computational resources in a blackbox for users to access via credits. There is no mechanism for accountability due to the lack of transparency on what Block producers are able to create in terms of computational power.”
According to Whiteblock, the actual throughput recorded by EOS under “realistic” network conditions is substantially lower than that claimed by EOS marketing materials, and the network suffers from a basic security problem of repeated consensus failure and lack of Byzantine Fault Tolerance.
In June, CCN reported that barely a week after the launch of its mainnet, EOS became immersed in controversy after an incident with its block producers which led many to question the extent of the network’s decentralisation. Whiteblock’s findings would appear to lend credence to those fears, which could have a significant effect on the EOS price.
Delivering its verdict on the network as a whole, Whiteblock said:
“The research results prove the inaccuracies in performance claims and concluded that the foundation of the EOS system is built on a flawed model that is not truly decentralized.”
CCN Exclusive Interview With Whiteblock CTO
Following the release of the report, CCN interviewed Whiteblock CTO Zak Cole to get his exclusive comment on the implication of the report for the EOS community and the blockchain ecosystem at large.
CCN: Your research concludes that EOS transactions are not cryptographically validated, making it a distributed homogeneous database, as against a blockchain. What is the implication of this for EOS as an ecosystem? Does it significantly change the picture of what EOS promised to achieve (Ethereum killer), and should EOS investors and users be worried?
Cole: My hope is that the results of our research can help provide a healthy foundation for community discussion rather than perpetuate some sort of political war between rival factions. I believe the EOS ecosystem needs to evaluate their long term goals in order to identify a concise roadmap that can help build the system which was initially presented. It is not productive to pit Ethereum against EOS when the two systems are drastically different: one is a decentralized peer-to-peer network backed by cryptographic proofs and the other is an optimized distributed database which functions more similarly to an Infrastructure-as-a-Service product one would find on a common cloud computing platform.
At Whiteblock, we aren’t EOS people. We aren’t Ethereum people. We’re blockchain people. The intent of our research wasn’t to prove that one is better than the other, but rather provide an objective and scientific analysis the community can reference in order to build high-performing and functional systems. The Whiteblock team will also be mentoring at the EOS Hackathon in San Francisco next week. Our only goal is to assist in the efforts of building a bridge that allows blockchain technology to transition from the realm of fringe science to a viable solution that can provide practical use and shape the decentralized world of the future. This is why we developed the Whiteblock testing framework.
The community needs development tools which can provide transparent and objective performance data to distinguish fact from marketing language and understand the function of the systems we are building. The bottom line is that EOS is not capable of providing throughput to the degree which has been implied and it won’t be able to anytime soon. The system is simply unable to perform in accordance with the messaging that has driven their multi-billion dollar campaign. There’s a lot of work to be done and I hope they’re able to deliver on what was promised. Either way, it’s been an informative experiment in distributed computing.
EOS investors and users should only be worried if they’ve speculatively gambled on profiting from the unregulated market of an emerging technology.
CCN: The research also states that the actual throughput of EOS is significantly less than was claimed. In layman’s terms, what does that means for users and dApp developers?
Cole:When determining which platform is best suited to build for building your decentralized application, developers should first evaluate their priorities. If you’d like to experiment with the capabilities of decentralized peer-to-peer transactional logic, ensure that the system is actually capable of providing the functionality required to do so. If you want something that offers a high degree of transactional throughput, what’s the problem with using an existing payment gateway like Shopify or Stripe? There’s no shame in sticking to traditional client/server architectures that actually work.
Another important thing to mention is that EOS isn’t really free of transaction fees. Instead, these costs are offset to the dApp developers themselves, and the cost of running these applications can be prohibitively expensive. This is going to create a market similar to what we already see in most software systems, like the Apple’s App Store, and users will likely end up paying a significant amount more than they anticipated. I don’t know if anyone has yet to notice the significant drop in successfully processed transactions as latency and user volume rises either, but there are more important factors at play than just throughput.
CCN: Does EOS essentially present a security risk to users, or are these shortcomings things that can be fixed?
Cole:I believe the EOS system, as it is now, presents inherent security vulnerabilities. There is no effective implementation of game theory or additional algorithmic mechanisms to ensure the block producers are behaving the way they should and there is no guarantee that the assets you store today will be available or accessible tomorrow. The entire value of the EOS consensus model is based on a token holder’s ability to vote for which blocks producer they choose to act on their behalf, but when there’s nothing stopping the block producers themselves for casting votes in their own self-interest, what’s the point? Even if there were, there are no functions, cryptographic, computational, or otherwise, which governs block producer behavior. This is glaringly apparent and doesn’t take a three month research project to understand.
That being said, these shortcomings can be fixed, but if they were, EOS would likely be no different than many other masternode systems like Dash or Syscoin.
CCN: Does the fact that the study was commissioned by ConsenSys represent a conflict of interest?[Editor’s Note: ConsenSys is an Ethereum development studio with significant investment in ETH applications]
Cole: Our research was funded by about 20 organizations in addition to ConsenSys. Funding was also provided by Bo Shen, Dan Larimer’s former partner and co-founder of Bitshares, which EOS used as the basis for much of their technology. ConsenSys funding a portion of the research initiatives has no influence on the scientific process and should really be considered a moot point. We’ve conducted the same tests on Ethereum and pointed out their flaws as well. The Ethereum community was receptive to our research and engaged us further to continue our research. We’ve worked with dozens of blockchain systems. The purpose of our tests aren’t to point out what’s good about a system. This isn’t a beauty contest. In order to build more effective and higher performing systems, we should be objective and transparent and identify weaknesses in order to optimize and account for them in the design process. If the EOS community chooses to be combative towards tests and observations of this nature, the entire ecosystem is doomed and will certainly never achieve their purported scale.
Here is a link to our research which cites several significant security and performance flaws in Ethereum.
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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.
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Tether, or USDT, is supposed to remain “tethered” to the US Dollar, as its name implies. That’s its whole purpose as a token: it exists on exchanges as a way for traders get their profits to safety, in a sense, so they have some idea of the real fiat value of their portfolio.
It was originally created by Brock Pierce, former actor and current crypto entrepreneur, and some other venture capitalists and first launched on major fiat-crypto exchange Bitfinex. At present, it is used on nearly every major exchange, but you can only withdraw US dollars at the full $1.00 value as a result of having USDT on Bitfinex. On other exchanges, one is able to get a dollar’s (in theory) worth of a crypto that is paired with USD and thus cash out to USD at a predictable rate.
According to Tether’s site:
“Tether Platform currencies are 100% backed by actual fiat currency assets in our reserve account. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service. The conversion rate is 1 tether USD₮ equals 1 USD.”
Tether No Longer The Only Stablecoin In Town
This last bit is the news of the day: tether has once again divorced itself from the 1:1 US dollar ratio it promises investors. The current price as shown below is its lowest point since the middle of October when it dipped all the way to 93 cents. There are a few factors which go into a stablecoin actually “destabilizing,” and in the case of tether, it’s fair to say there are positive and negative factors which should be moving it both directions.
Source: CoinMarketCap
In the red column, which might encourage a run on the USDT bank, there have been a number of new alternatives to USDT, all of which have come out in the past several months. Coinbase and Circle launched USD Coin, itBit launched Paxos Standard, and the Winklevoss Brothers’ Gemini exchange backed a stablecoin called Gemini Dollar. All of these tokens have similar purpose and functionality to USDT, and there are some tertiary effects to them coming about.
In the case of Coinbase, Circle, and Gemini, these exchanges no longer have incentive to list or mess with USDT at all. In the case of Paxos Standard, a legitimate competitor with a perceptibly superior regulatory profile (itBit has a BitLicense) emerges.
The only thing that can drive the price of any token down, besides generous holders who want to sell at a loss for some reason (which never happens), is sell-offs and decreased demand. While its price has dropped more than 5 cents off the target of $1.00, volume steadily increased over the 24 hour period, indicating the theory is likely correct: traders are liquidating USDT beyond the ability of exchanges to compensate at the desired rate, thus decoupling the bitcoin (and thus dollar) value of the token from its target.
The stablecoin is a tricky, idealistic instrument which anyone is likely to struggle to successfully implement. Consequently, the new competitors could also face similar problems in the future.
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Crypto project Dash has announced the launch of Dash Text, an SMS-based cryptocurrency transaction service for Venezuelan users, as it builds on its already strong presence in the crypto dependent country. In an announcement released this week, the company said that Dash Text eliminates the need for Venezuelan users to possess smartphones and internet access to carry out crypto transactions, which has historically been a significant barrier to adoption in the impoverished country suffering from hyperinflation.
Driven by several months of hyperinflation which have rendered the bolivar practically worthless, Venezuelans have increasingly turned to cryptocurrencies as a solution, as has been illustrated by a series of well-publicised incidents.
Dash is looking to build on the success it has recorded in cashing in on the trend by targeting millions of Venezuelans who are not able to partake in the crypto economy because they do not own smartphones or they cannot access the internet. The solution to this problem was built in partnership with BlockCypher, which specializes in blockchain solutions and blockchain agnostic products that enable users to engage with multiple cryptocurrencies through one platform.
DASH/USD | Bittrex
Currently in beta testing, Dash Text will enable users of Movistar and Digitel — Venezuela’s largest telecom providers — to access Dash services via a simple five-digit shortcode.
Speaking about the unique demand that gave rise to Dash Text, Bradley Zastrow, Global Head of Business Development at Dash Core, said:
“Venezuelans living abroad send an estimated $2 billion USD back home in remittances. This process often takes too long and costs too much, making it a huge pain point for many users. With Dash Text, we are providing real solutions that address real problems. People need easy and cheap ways to send money home, and we’ve done it in a way that expands the Dash ecosystem to those without smartphones! Dash Text offers the perfect solution to ensure that everyone can become part of the Dash family, regardless of what phone people own.”
According to the announcement, to get registered on Dash Text, users should send an SMS with the word “DASH” to 22625, followed by another SMS with the word “CREAR,” which will create their Dash wallet. Once this is done, users will be able to send and receive Dash seamlessly via SMS, which could potentially be huge for the sizable population of Venezuelans who use feature phones or lack reliable internet access.
It will be recalled that in August, CCN reported that Dash recorded a sharp price and volume increase as a result of its successful adoption push in Venezuela which saw it sign up several prominent retailers across the country. It also penned a deal with Kripto Mobile, a maker of mobile phones that are pre-equipped with Dash wallets in a deal that was predicted to make the cryptocurrency’s monthly user growth rise to 10,000.
Featured Image from Shutterstock. Charts from TradingView.
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