Another Day, Another Exchange Hack

Exchange be Hacked. The recent hack of Bithumb, the 6th largest cryptographic asset exchange, continues the worrying trend of hackers finding ways around the security of these platforms, and siphoning funds stored in exchange hot wallets.

Following the attack, In a quickly deleted tweet on the official Bithumb twitter, it was announced that “cryptocurrencies valued about $30,000,000 was stolen” and “Those stolen cryptocurrencies will be covered from Bithumb and all of assets are being transferring to cold wallet.” The following tweet was then released, detailing an exchange lock-down and a ‘we’ll have to get back to you on that’ message as regards to a restart date.

Who provides exchange liquidity?

The tweets, on top of the hack, raise concerns about the liquidity management techniques used by Bithumb and other exchanges. Typically, an exchange will take a percentage of customer funds and place them in an asset pool that is used to facilitate transactions. The analogy in a bricks and mortar retail store context would be the placing of a cash ‘float’ in the cash register at the start of the day to provide change for customer transactions.

With the value of daily crypto trades typically sitting somewhere in the US$6-10 billion range, there will always be significant funds in these floats, which must be held in a ‘hot’ wallet so they can be used to facilitate transactions.

The fact that the first tweet that Bithumb made about its hack included a statement that “all assets are being transferred to [a] cold wallet” indicates that overexposure in terms of funds in Bithumb’s hot wallet was top-of-mind for the exchange’s management — which wanted to reassure its customers that at least the safe door was been locked after the thieves had left.

The extent to which customer funds were being used for transactions at Bithumb, and how long it will take to provide refunds is unknown.

From a customer perspective a best case scenario is an exchange that uses its own money to provide the float. Coinbase, for example, states that 98% of customer funds are always in cold storage, but how much Bithumb, and other smaller exchanges are exposing their customer’s funds to hacking risks, remains both unknown and concerning.

Uninsured exchanges

It is understood that most exchanges cover their exposures with some form of self-insurance. This is generally done by maintaining a fund of safe investments, that is accessed in situations where emergency liquidity is required. Exchanges are somewhat forced into using this option because of a lack of formal third party insurance options available to them. This looks to be changing with insurers like  AIG, Sumitomo and XL Catlin, beginning to offer policies related to crypto theft.

The continued fleet-footedness of hackers to stay ahead of security protocols set up by exchanges, is also worrying. Only a week before the attack on Korea-based Bithumb, security at another Korean exchange, Coinrail, was also breached for$40 million of held assets.

Many in the crypto space have lost faith in the ability of these exchanges to ever protect themselves from attackers, and are hoping that decentralized exchange (DEX) models will be a market saviour. Decentralized exchanges have assets secured across multiple storage points secured on the blockchain, and in this sense, are more shielded against large-scale attacks than centralized, clearing-house style exchanges. Examples of the model include Omisego andIDEX.

IDEX, is currently the most used Dapp in the world. Even so, it still only has a few thousand users. This may indicate an interest in DEX’s, but not wider commitment or belief in their current capabilities to provide exchange solutions.

Market Reaction

In the hours following the hack there was an immediate disgruntled reaction from markets, evidenced by the sharp dip in the price of BTC to under $6,600. However, BTC, and the wider market has since seen a price recovery. Indicating faith that Bithumb will reimburse customers, or belief that any wider risk created by the hack, is not systemic.

Crypto exchanges in Korea, interestingly, operate under a very light regulatory touch as they are categorized as ‘communication vendors’ and do not fall under the jurisdictional watch of Korea’s Financial Supervisory Service. Although more regulatory oversight is now being considered due the latest run of hacks, CCN has reported that the Korean government has steered clear of crypto regulations to date, for the curious reason that it thought the imposition of regulations would be viewed as a government endorsement of the sector — and encourage more retail investors@BPI

Pertama Kali Dalam Sejarah, Klub Sepak Bola Beli Pemain Pakai Bitcoin

Bitcoin dan  Sepak Bola.  Akankah crypto jadi tren di dunia sepak bola? Sebuah klub sepak bola amatir asal Turki menciptakan sejarah baru di pesepakbolaan dunia. Bukan karena memecahkan rekor gol. Melainkan soal pembelian pemainnya yang menggunakan mata uang digital atau crypto.

Klub bernama Harunustaspor ini membeli seorang pemain dengan mata uang Bitcoin.Yup, Bitcoin belakangan sedang naik pamor karena nilainya yang semakin naik dari tahun ke tahun. Tak heran, baik pemilik klub maupun pemain mau menerima pembelian dengan mata uang Bitcoin.

1. Klub Harunustaspor Sepakat Membeli Kıroğlu dengan Total 4500 Lira

Klub Harunustaspor yang berbasis di Provinsi Sakarya, Turki ini membeli Ömer Faruk Kıroğlu. Dilansir dari Businessinsider.sg, dan Washingtonpost.com, mahar sebesar 2000 lira (Rp 7,3 juta) atau $531,70 senilai Bitcoin diberikan pada pemain berusia 22 tahun tersebut. Tak hanya itu. Kıroğlu juga menerima uang tunai sebesar 2500 lira atau setara Rp 8,9 juta.

Meski nilai Bitcoin dan crypto lainnya bersifat fluktuatif, nyatanya Kıroğlu dan Klub Harunustaspor telah mencapai kesepakatan bersama terkait mahar yang anti-mainstreamini.

2. Pertama Kali Terjadi di Turki dan Dunia

Sang pemilik klub, Haldun Şehit mengklaim bahwa hal ini menjadi yang pertama dalam sejarah Turki maupun di seluruh dunia. Ia ingin mengangkat nama klub di negara Turki dan juga dunia, sekaligus bangga atas apa yang ia lakukan.

Sementara itu, Kıroğlu akan segera bergabung dalam sesi latihan klub setelah menandatangani kontrak. Ia berharap karier barunya ini akan menguntungkan klub dan dirinya.

Beberapa bulan terakhir tepatnya akhir tahun 2017 lalu, nilai Bitcoin mencapai $20.000 atau sekitar Rp 260 juta. Namun sejak awal tahun 2018 ini, nilainya anjlok bahkan mencapai 50%.

Melihat track record Bitcoin sendiri, hal ini wajar terjadi mengingat di setiap awal tahun nilainya selalu anjlok. Sementara itu, di akhir tahun angkanya akan terus meningkat, dan begitu seterusnya.

3. Ternyatanya crypto bukan hal baru di dunia sepak bola

Layaknya Indonesia, pemerintahan Turki pun telah melarang penggunaan mata uangcryptocurency. Selain berbahaya, mata uang ini dinilai juga tidak memiliki landasan hukum yang dapat melindungi tiap transaksinya.

Otoritas dari berbagai belahan dunia, terutama di Asia berusaha untuk mengendalikanbooming-nya perdagangan crypto. Gak heran transfer pemain menggunakan mata uang digital ini menjadi kontroversial di Turki.

Meski hal ini menjadi yang pertama dalam sejarah, sebenarnya akhir bulan lalu Arsenal, klub Liga Inggris telah melakukan kerjasama dengan CashBet, sebuah perusahaanblockchain cryptocurrency.

Sehingga crypto di dunia sepak bola rasanya bukan hal asing lagi. Dan bukan tidak mungkin lagi akan ada pemain lain yang dibeli menggunakan crypto@BPI

Market Capitalization Decreased by 10 Billion Dollars After the Hack of Bithumb

Market After the Hack of Bithumb. After yesterday's hack of the Bithumb Exchange, the market capitalization decreased by 10 billion US dollars. Today, the situation has become better. The fact is that Bitcoin slightly increased in price and thereby added to the total market capitalization of digital assets - $8 billion.

During the day, after it became known about the hack of the Bithumb trading platform, such cryptocurrency assets as Bitcoin, Ethereum, Ripple and Bitcoin Cash declined in value by 2%. We note that South Korean investors, both in the cryptocurrency market and in the foreign exchange market, began to sell their assets, fearing that breaking the Bithumb exchange could lead to more serious consequences.

At the same time, representatives of the exchange, immediately commented on the current situation:

"The damage done to users will be repaid by Bithumb. Now, all the cryptocurrency assets are transferred to a cold wallet."

Having made more than 300 million dollars of net profit in 2017, the stolen $30 million isn't a serious problem for the crypto exchange. On this background, the company asked the regulatory authorities to take measures to combat such situations and, accordingly, their prevention in the future.

Yesterday the experts expressed optimistic assumptions regarding the state of the cryptocurrency market. First of all, in this case there was talk about Bitcoin and Ethereum. The fact is that they avoided serious falls. In particular, the BTC hasn't fallen below 6.2 thousand dollars.

At the same time, due to the low volume of the entire cryptocurrency market, it is difficult to say that the "bears" still lost control over it. It is still possible that the BTC may fall to below $6,000. In the same case, if bitcoin grows to 7 thousand, the key resistance level will be broken and the digital asset will have chances to grow further. Today, investors simply have to watch the situation on the market@BPI

Winklevoss Brothers Score Another Crypto Investment Patent

Crypto Investment Patent. Crypto exchange Gemini founders Tyler and Cameron Winklevoss have long sought the creation of a bitcoin exchange-traded fund.

And while that process remains in flux, a company tied to the brothers has won another U.S. patent related to the creation of exchange-traded products tied to cryptocurrencies and digital assets.

The patent was awarded to a firm called Winklevoss IP LLP, and both Winklevoss brothers are included as the inventors along with Evan Louis Greebel, Kathleen Hill Moriarty and Gregory Elias Xethalis.

The patent, awarded on June 19, details a method "for providing an exchange-traded product holding digital math-based assets" as well as the issuance of shares tied to that ETP. It adds to the body of intellectual property the Winklevosses have sought to obtain, though it's not entirely clear when or how the concepts will be applied to real-world products.

An ETP, such as an exchange-traded fund (ETFs), is a type of security, the price of which is derived from other investment instruments - in this case, cryptocurrencies.

As CoinDesk previously reported, the Winklevoss brothers won a patent last month for a system that settles transactions for ETPs tied to cryptocurrencies. Like the other patent, this week's award names a variety of cryptocurrencies, from major ones like bitcoin and monero to more obscure ones like BBQcoin.

Publicly available data shows that this week's patent is the seventh crypto-related patent the Winklevoss brothers have received, with the first being awarded in December of last year.

The U.S. Securities and Exchange Commission (SEC) once denied a bid proposed by the Winklevoss brothers in March 2017 to list a bitcoin-tied exchange-traded fund (ETF), citing "the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public.@BPI

Why South Korea still matters to crypto

South Korea and crypto. With China to its west and Japan to its east, South Korea is surrounded by economic giants, but nonetheless remains a pivotal influence on the global cryptocurrency markets — for reasons that are not immediately apparent to most external observers

Just as the industrial revolution centred on the cities of Northern England, and the digital revolution on the shores of Silicon Valley, blockchain development is beginning to concentrate in certain areas. One of these places is South Korea, where authorities have recently announced plans for “Crypto Beach” a major blockchain centre styled after Switzerland’s Crypto Valley. This development will be a focal point for a country that already has an outsized influence on the global cryptocurrency economy.

Sitting behind only Japan and the USA, South Korea is the world's third largest cryptocurrency market, and a staggering ~31% of the country's working population have invested in Bitcoin and other cryptocurrencies—bringing the blockchain far closer to the mainstream than most countries have managed.

A crypto society

Given it is a high-tech society that is well-adapted to new technology, such high rates of adoption might come as no surprise - but there is more to South Korea's crypto story than meets the eye. Despite having the 11th largest economy in the world, with high-tech products exported globally, Korean society faces certain social issues that have greatly increased the appeal of crypto.

High youth unemployment is one factor, which has hovered around 10 percent for the past few years, along with another 40% of youth that are thought to be underemployed—lacking enough hours of work to sustain independence. Even those in full-time work are still likely to find themselves priced out of the housing market, especially in Seoul where house prices have been found to be more expensive than both London and Los Angeles.

Combine these economic difficulties with the fastest internet speeds in the world, the highest percentage of smartphone ownership, and a national ban on gambling, and we have the perfect storm of opportunity for crypto.

On the global stage

When the China ban hit the markets in late August 2017, a vacuum opened up, ready to suck in the wealth generated by the yuan-bitcoin exchange markets, which are thought to have accounted for up to 80% of global volume. This gave neighbouring countries like South Korea, along with Japan and Hong Kong, the opportunity to occupy a more prominent position on the international scene.

While Japan is often dubbed as the most crypto-friendly of nations, recent events have drawn a shadow over the country—with authorities attempting to rein in the market, placing bans on privacy coins, and introducing strict auditing requirements for Japanese exchanges.

South Korea however, is pushing forward, and after flirting with the idea of a blanket ban, has adopted an arguably more progressive stance—announcing intentions to legalise ICOs in the country, and apply specific regulations to this type of fundraising.

The importance of appropriate regulation is clearly not underestimated by the Korean authorities, who after a foreboding statementfrom the Prime Minister, have introduced KYC regulations on exchanges that prevent foreigners and minors from registering in a bid to tackle money-laundering and “overheating” in the market.

This recognises the wave of desperation that hit the country following the market downturn, which caused not only a drop in trading volume in the country, but a rise in cases of a psychological malady termed the ‘bitcoin blues’, which is induced as dreams of prosperity are dashed by unpredictable markets.

Adoption

While trading volumes may have plummeted even further than the global market this year, South Korea is still arguably ahead of the curve when it comes to adoption. In a recent landmark case, a top South Korean court officially recognised cryptocurrency as an “asset with measurable value”, paving the way for future adoption.

Bithumb, South Korea’s biggest cryptocurrency exchange, have recently made another move aimed to spread the use of cryptocurrency throughout the mainstream economy. Their partnership with Korea Pay aims to spread crypto payments to over 8,000 merchants across the country by the end of the year.

And which cryptocurrency will they be spending? While the most famous project to come out of Korea is ICON (ICX), dubbed South Korea's 'national blockchain', this is unlikely to be the chosen medium of exchange. Trading volumes on Bithumb show that the most popular cryptocurrencies in the country mirror those in the West, with Bitcoin, Ripple and EOS ruling the roost. ICON also has a lot to prove as it moved away from being an ERC 20 token to its own mainet on June 20th, at a time when the marketplace is particularly sensitive to mainet transition issues given the problems with EOS.  

However adoption progresses, events on the peninsular are likely to continue to have an outsized impact in the cryptoworld, as demonstrated most recently by the hacks of Korean exchanges Coinrail, which coincided with Bitcoin plummeting over 10% on June the 10th, quickly followed by a Bithumb on June 20th which saw BTC down 2.2% in 30 minutes@BPI

Almost 60% of Wealthy People Show Interest in Cryptocurrencies

Wealthy People Interest in Cryptocurrencies. According to the publication of the corporate consulting company Capgemini (headquartered in France), almost 60% of rich respondents showed interest in investing in the cryptocurrency market. This statistics was published in World Wealth Report 2018.

Based on the published data, about 29% of all respondents show a high interest in cryptocurrencies. While 26.9% of respondents are only interested in digital assets. The indicators of interest depend on the region. For example, for Latin America this sphere is most interesting, next is the Asia-Pacific region.

In the study conducted in the first quarter of 2018, 2,600 people from such regions as North America, Latin America, Europe, and the Asia-Pacific region took part. Almost 80% of all respondents control 1-5 million US dollars in the cryptocurrency. In turn, about 2% - already have 20 million US dollars in cryptocurrencies. All the rest control from 5 to 20 million dollars.

The potential of cryptocurrency as an investment and value is exactly what stimulates interest in this industry. Most often, people in the age of 40 are interested in the digital assets market.

The report notes:

"Given the context of regulatory mis-steps and reputational damage since the financial crisis, many wealth management firms are tending towards being conservative when it comes to cryptocurrencies, at least until they are better understood"

A separate report by Knight Frank specializing in real estate says that about 21% of respondents say about increasing their investments in cryptocurrencies last year. At the same time, even a year ago, the understanding of digital assets was not as extensive as it is now. That's why the situation is improving every day@BPI

Japan’s SBI Crypto Exchange Adds Two Major Cryptocurrencies

Japan’s SBI Crypto Exchange. Japan’s SBI Virtual Currencies has added support for two major cryptocurrencies in addition to the one trading pair that its crypto exchange service, Vctrade, launched with. Users who pre-registered prior to the launch can now trade BTC, BCH, and XRP against the Japanese yen.

SBI Virtual Currencies, the cryptocurrency exchange subsidiary of one of Japan’s largest financial services groups, has announced support for two major cryptocurrencies. Starting Monday, June 18, customers can start trading BTC/JPY using the exchange’s Vctrade service. This is in addition to the BCH/JPY trading pair which the exchange started offering on June 8.

Three Trading Pairs

Japan’s SBI Crypto Exchange Adds Two Major CryptocurrenciesSBI Virtual Currencies is one of the 16 government-approved crypto exchanges in Japan. The company launched the Vctrade crypto exchange service on June 4 with just the XRP/JPY trading pair. Currently, the service is only available to a limited number of users who pre-registered; the full launch is expected next month. With Monday’s announcement, the exchange now offers three trading pairs: BCH/JPY, BTC/JPY, and XRP/JPY.

For all three cryptocurrencies, customers can trade between 500 yen (~US$5.5) and 5 million yen (~$45,261). Alternatively, they can place their orders in cryptocurrencies of between 0.0001 and 40 BCH, 0.0001 and 5 BTC, or 10 and 70,000 XRP.

Japan’s SBI Crypto Exchange Adds Two Major CryptocurrenciesAccording to local media, SBI Group said at the company’s third-quarter earnings press conference that there is a possibility of adding ether (ETH) in the future. However, the company also indicated that it would not support smaller cryptocurrencies, Impress Corporation conveyed.

To gain market share in the crypto space, SBI Group plans to convert users from its existing securities business, which the group says is already the largest in Japan. SBI Securities “is number one in the share of individual stock trading value, number of accounts, deposits and profitability,” the group wrote. SBI Securities currently has approximately 4.17 million accounts@BPI