Despite dips in value and articles claiming Bitcoin is dead, it finished 2020 strong. The world’s highest-valued cryptocurrency almost tripled its value in one year. Waves of private investments as helped bolster the cryptocurrency’s run. Larger financial institutions like JP Morgan Chase also created their own digital currency. Despite this, it may take more than 2021 for other institutions to buy into Bitcoin.
Cryptocurrencies like Bitcoin are decentralized from banks. When depositing money with a financial institution, you entrust them to hold it. With Bitcoin, you are responsible for tracking and securing the assets yourself. Otherwise, you entrust your digital assets to an exchange which is likely unregulated. Biden is set to announce a new lead for the U.S. Securities and Exchanges Commisions (SEC) soon. Gary Gensler will likely be tapped for this position. He is uniquely qualified for this position.
Gensler served as the former chairman of the Commodity Futures Trading Commission. He taught digital currency and blockchain at the MIT Sloan School of Management. He’s testified about cryptocurrencies in the past, before congress. Gensler’s future legislation could diminish the risks of trading these digital assets. In 2018, Gensler spoke optimistically at Bloomberg’s Institutional Crypto event providing insight into his potential policy goals:
I believe that security and scalability issues will be solved. As this keeps changing, you’ll see movement towards decentralized systems.
The lack of regulation harms people trading and holding cryptocurrency. Many exchanges remain unregulated and new coin offerings are popping up everyday. If a new company aims to fund their blockchain endeavour, they often release a unique token. Buying these tokens through the initial coin offering (ICO) funds the system itself. Fraudulent scams may lack transparency or provide false data about their funding.
The premise and volatility of blockchain makes initial coin offering tantalizing. The lack of regulation helps entice scammers. Unlike investing in stocks for an Initial Public Offering, there aren’t any regulations. Taking the helm of the SEC, Gensler could introduce protections against such offerings. It could also provide clarity to a recent SEC lawsuit which tanked the value of the XRP cryptocurrency.
There is currently no regulatory body overseeing ICOs. Regulators must pave clearer paths for blockchain companies. Additionally, it is still unclear when a digital asset becomes a security. Since the initiator of the XRP lawsuit has departed the SEC, Gensler may be a key decider in this case. From his talk, its clear that Gensler believes in some form of SEC regulation for individual cryptocurrencies. Addressing these policy gaps could make digital currencies safer, increasing their adoption.
The Safety of Exchanges
Bitcoin and other tokens, purchased through online exchanges are vulnerable to manipulative activity. It is often difficult to discern whether an exchange is legitimate or not. There is also the compounding issue of security and hacks that add to the volatility and risk of these assets.
As a result, many veteran traders use hardware wallets to store their tokens. Inevitably, hardware may get thrown out or you may forget the password. Stefan Thomas forgot the password to his wallet. He has two guesses left until he locks himself out $300 million in Bitcoin forever. A reasonable middle-ground, could protect consumers from losing their digital assets.
Creating laws and regulations for these exchanges could mitigate their risk. Gensler recognizes the precarious nature of many crypto exchanges:
For most cryptocurrencies, 95–98 percent of all activity is happening on crypto exchanges, not on blockchain itself. There is a lot of manipulative activity.
Gensler will probably pursue some form of regulation for these exchanges. This also opens the door to Bitcoin exchange-trade funds (ETF) that could also curb trading on risky exchanges. Though such an ETF may be a future inevitability, it is unlikely to become an immediate priority.
It is unclear what 2021 has in store for Bitcoin and other cryptocurrencies. The upcoming appointment of Gensler as an SEC chair could be positive for digital assets. Gensler is uniquely qualified to bring in sensible regulation for trading cryptocurrency. He has introduced major reform in the past, as the former chair of the Commodity Futures Trading Commission. Gensler himself is optimistic about Bitcoin and other digital currencies. I look forward to seeing how he will update the SEC to deal with cryptocurrency.
Nym: The World’s First Generic Incentivized Mixnet Releases its Whitepaper
[PRESS RELEASE – Please Read Disclaimer]
In a time when mass surveillance and data harvesting are ever present and not a day goes by without news of companies selling user data for profit, Nym Technologies is building a next generation privacy network that can change the way people use the internet.
Chelsea Manning, a famous whistleblower and technologist, says “As methods for network traffic analysis have dramatically improved in the last decade, I have frequently called for research (most notably in 2016) into alternative methods to Tor that avoid exposing the data within the network to such analysis. Nym is one such viable alternative worthy of research, and developmental implementation.”
Nym was conceived in 2017 and was the first privacy project to receive funding from Binance Labs in 2018, followed by a $2.5M raise from other well known investors. Today, the actual design of Nym has been made public after extensive review by technologists like Chelsea Manning, academics like Carmela Troncoso, and venture capital firms like Polychain Capital.
Carmela Troncoso (EPFL) notes “I spent a long part of my career working on improving mix-based anonymous communications systems. It is thrilling to see how the Nym team, a unique combination of expert software engineers and privacy experts, have made mixnets a reality.”
The Nym network is a generic, decentralized, and incentivized infrastructure that provides privacy to a broad range of applications and services, including any blockchain. A core component of Nym is a mixnet that protects the metadata of the internet packets sent to it with privacy superior to both VPNs and Tor.
Metadata is “data about data”, and includes IP addresses of the users, geolocations, information about who talked to who, when, and how often. All of this metadata can be monetized or used without users knowledge. Now it can be protected by Nym.
Anyone can join the network by running a node and get rewarded in NYM tokens for providing privacy to the network. Nodes do useful work anonymizing packets for users and services.
NYM tokens can be transformed into anonymous credentials that allow users to privately prove their “right to use” of services in a decentralized and verifiable manner. This allows users to be private at the network level as well as the application layer. Cosmos and the European Commission are amongst the many who have been supporting the use of Nym’s anonymous credentials.
The 3rd-party applications and services that can integrate their systems to the Nym network to protect their users from malicious actors and preserve their privacy range from crypto apps (wallets or DeFi projects) to messaging applications, IoT devices, or literally any data transfers over the internet that can leak metadata.
Currently, Nym is running an incentivized testnet with a 1500 capped number of nodes on the Liquid network, but this limit will raise in the next major release due to the high demand of people who want to join the network and test its features out.
Throughout human history, privacy has been considered a great asset and a prerequisite for freedom. However as privacy was not built into the fabric of the internet, power is now in the hands of a few powerful players. Nym is setting off to change this and give power back to users so they can decide if and how they reveal their data. To know more about the technicalities, read the whitepaper or join the Nym Telegram channel to stay up to date.
This bullish Bitcoin options strategy lets traders speculate on BTC price with less risk
Historical data shows that it is nearly impossible to consistently predict Bitcoin’s price action and many traders that attempt this end up losing money. Now that Bitcoin trades near $50,000, the ultimate goal for most traders is to hold on to their current holdings and incrementally add to them in a way that is not terribly risky.
Options strategies provide excellent opportunities for traders who have a fixed-range target for an asset. For example, using leveraged futures contracts might be a solution for a scenario where one expects a price increase of up to 28% over the next month. Of course, using a tight stop loss lessens the viability of the trade.
On the other hand, using multiple call (buy) options can create a strategy that allows gains that are four times higher than the potential loss. These can be used in both bullish and bearish circumstances, depending on the investors’ expectations.
The long butterfly strategy allows a trader to profit from the upside while limiting losses. It’s important to remember that options have a set expiry date; therefore, the price increase must happen during the defined period.
The Bitcoin (BTC) calendar options below are for the March 26 expiry, but this strategy can also be used on Ether (ETH) options or a different time frame. Although the costs will vary, its general efficiency should not be affected.
The suggested bullish strategy consists of buying 1 BTC worth $48,000 call options while simultaneously selling double that amount of $56,000 calls. To finalize the trade, one should buy 1 BTC worth of $64,000 call options.
While this call option gives the buyer the right to acquire an asset, the contract seller gets a (potential) negative exposure.
As the estimate above shows, if BTC is trading for $48,700, any outcome between $49,380 (up 1.5%) and $62,630 (up 28.6%) yields a net gain. For example, a 10% price increase to $53,570 results in a $4,000 net gain. Meanwhile, this strategy’s maximum loss is $1,350 if BTC trades below $48,000 or above $64,000 on March 26.
This allure of this butterfly strategy is the trader can secure a $4,050 gain, which is 3x larger than the maximum loss, if BTC trades from $53,550 to $58,460 expiry.
Overall it yields a much better risk-reward from leveraged futures trading considering the limited downside.
The multiple options strategy trade provides a better risk-reward for bullish traders seeking exposure to BTC’s price increase and the only upfront fee required is the $1,350 which reflects the maximum loss if the price is below $48,000 or above $64,000 at the expiry date.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Transaction batching protocol Furucombo suffers $14 million “evil contract” hack
The latest “evil contract” exploit has netted an attacker over $14 million in stolen funds.
Furucombo, a tool designed to help users “batch” transactions and interactions with multiple protocols at once, fell victim to the attack which centered on token approvals from users.
The attacker’s address currently has $14 million worth of various cryptocurrencies, but the attack appears to be larger as they have been transferring ETH to privacy mixer Tornado Cash in batches over the last hour.
This attack is conceptually similar to the $20 million “evil jar” attack that struck Pickle Finance last year, as well as the $37 million “evil spell” exploit that hit Alpha Finance earlier this month. In these “evil contract” exploits, an attacker creates a contract that fools a protocol into believing it belongs there, giving them access to protocol funds.
So what happened to Furuсombo
An attacker using a fake contract made Furuсombo think that Aave v2 has a new implementation.
Because of this, all interactions with ‘Aave v2’ allowed transfers approved tokens to an arbitrary address. pic.twitter.com/gQVxJqiAmL
— Igor Igamberdiev (@FrankResearcher) February 27, 2021
In this case, the attacker ‘tricked’ the Furucombo protocol into thinking that their contract was a new verison of Aave. From there, instead of draining funds from the protocol as in previous evil contract exploits, the attacker instead leveraged the ability to transfer the funds of every user who had given the protocol token permissions.
“Infinite permissions means you can wipe everyone who interacted with Furucombo,” said whitehat hacker and co-founder of DeFi Italy Emiliano Bonassi in a statement to Cointelegraph.
This type of exploit appears to be growing increasingly popular, now accounting for over $70 million in user funds lost in just a few months.
The team confirmed the attack in a Tweet, saying that they “believed” they’d mitigated the exploit but recommended revoking permissions “out of an abundance of caution:”
Today at 4:47 PM UTC the Furucombo proxy was compromised by an attacker. We have deauthorized the relevant components and believe the vulnerability to be patched but we recommend users remove approvals out of an abundance of caution.
— FURUCOMBO (@furucombo) February 27, 2021
Users can leverage tools like revoke.cash to do so.
The attack comes during a period of wider reflection in the DeFi world on security and the utility of auditing companies. In the last three months, three different auditing and code review services have emerged, each with a different incentive model designed to encourage more thorough and dynamic security practices.
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