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Blockchain Bites: Bitcoin’s Steep Sell-Off, Pornhub’s Crypto Payments, Twitter’s Latest Hack

Pornhub will accept BTC and LTC payments, a nonprofit wants Coinbase to be more transparent and credit default swaps are coming to the Ethereum blockchain.

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Pornhub will accept BTC and LTC payments, a nonprofit is calling upon Coinbase to be more transparent and credit default swaps are coming to the Ethereum blockchain. 

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Top shelf

Porn payments
Pornhub, the popular adult entertainment site, has added bitcoin (BTC) and litecoin (LTC) payment options for its Pornhub Premium product. The company is an example of legal, though untraditional, online businesses struggling with centralized payment processors: PayPal has blocked payments to the site without explanation, CoinDesk’s EU News Editor Daniel Palmer reports. The company has accepted verge (XVG) since 2018, and has recently added support for dollar-linked stablecoin tether (USDT). 

Crypto for taxes
People and businesses in the Swiss canton of Zug, home to “Crypto Valley,” will be able to pay their taxes in bitcoin (BTC) or ether (ETH) beginning next February. Authorities have partnered with the Zug-based crypto broker and custodian Bitcoin Suisse, which will convert cryptocurrency payments into Swiss francs and hand them over to the tax office. The canton will accept tax payments up to 100,000 CHF (around $109,000) in those cryptos, though no partial payment will be accepted. In a statement Thursday, Zug Finance Director Heinz Tannler said the move would help to normalize the use of cryptocurrencies in everyday life.

Another Twitter hack
Prime Minister Narendra Modi of India has become the latest victim of a Twitter hack meant to siphon cryptocurrency from unsuspecting users. A Twitter account of Modi’s personal website known as the Prime Minister’s National Relief Fund (PMNRF) was hacked and began soliciting 2.5 million followers to donate to the relief fund using cryptocurrency, the Nikkei Asian Review reported and Twitter confirmed. The social media giant is “not aware of additional accounts being impacted,” a Twitter representative said. Modi’s hack follows a high-profile breach that compromised several accounts, including those of U.S. Democratic Presidential nominee Joe Biden, Tesla’s Elon Musk, Kanye West and CoinDesk. The alleged perpetrators of that attack have been apprehended.

Full disclosure
The Electronic Frontier Foundation (EFF) is calling upon Coinbase to release regular transparency reports related to the government and law enforcement requests for information it receives. In a Wednesday blog post, the digital advocacy nonprofit said financial data is one of the “most sensitive types of information” a user produces. The way Coinbase responds to government requests could “have a huge impact on what types of speech thrive online,” CoinDesk’s Sebastian Sinclair reports. In June, Coinbase initiated procurement deals with the Drug Enforcement Administration and the Internal Revenue Service (IRS), for its investigations tool called “Coinbase Analytics,” which traces transactions conducted across the exchange ecosystem. 

COVID-19 relief
The Congressional Blockchain Caucus is urging President Donald Trump and other federal officials to adopt blockchain solutions to boost COVID-19 relief efforts. In a Wednesday letter, lawmakers said blockchain technology can help identify and authenticate individuals set to receive government benefits, streamline supply chains and create a registry of medical professionals. They further cited blockchain’s strong encryption mechanism that protects sensitive data. The U.S. government’s response to a pandemic has been a case study in governmental inefficiency, with states duking it out over critical supplies. Last April, 11 representatives signed a letter calling on the U.S Treasury Department to consider blockchain and distributed ledger technologies (DLT) in streamlining the distribution of stimulus funds to citizens across the nation.

Quick bites

At stake

Tether financialization
Credit default swaps (CDS), known for their role in the 2008 recession, have come to the Ethereum blockchain. Derivatives exchange Opium has introduced CDS for the dollar-linked stablecoin tether (USDT), providing insurance to buyers in case Tether, the issuer of the stablecoin, defaults. 

Tether, a key component of the crypto marketplace and fifth largest cryptocurrency by market capitalization, claims a 1-to-1 backing with U.S. dollars. This is often contested.

Tether revealed in April 2019 that only 74% of USDT was backed by “cash and cash equivalents.” The firm later said USDT was once again fully backed in a November 2019 retort to an academic paper that blamed the stablecoin for the 2017 bitcoin bubble. 

Further, the firm behind the stablecoin is under investigation by the New York Attorney General’s office for alleged misappropriation of funds.

Opium’s CDS product finally lets the controversial crypto’s critics and defenders “put their money where their mouths are,” CoinDesk’s Will Foxley reports. 

A CDS is a “transfer of the insurance from people who know and are confident to people who’d like to be insured. Derivatives are just about transferring the risk. Some people would like to have the risk and get paid, some people would like to pay to get rid of risk,” Opium founder Andrey Belyakov said.

The new CDS tethered to USDT can be customized to pay out under different scenarios, such as the stablecoin falling under a preset value, said Aave founder Stani Kulechov, who is advising Opium.

In this case, a sharp drop in USDT’s price from the usual $1 is used as a proxy for Tether turning out to be insolvent. So if the token fell to 70 cents, the writer of the contract would pay the buyer 30 cents at maturity.

Investors don’t need to hold USDT to purchase this coverage. They can use CDS to bet against the asset, while those who trust Tether to honor its obligations can earn a premium for standing ready to cover defaults.

Paolo Ardoino, chief technology officer at Tether, said through a spokesman: “Tether is solvent. Therefore, this solution is not really interesting to us or our community.”

Market intel

Steep pullback
Bitcoin (BTC) pulled back about $403 to $10,838 early Thursday, deepening a two-day sell-off that pushed the largest cryptocurrency to its lowest point in a month. CoinDesk’s Omkar Godbole previously reported an influx of 92,000 BTC on Wednesday – the biggest-single day rise in 37 days – could deepen bitcoin’s descent. “Inflows surged as people rushed to sell at near $12,000,” Philip Gradwell, chief economist at Chainalysis, tweeted early Thursday. There’s evidence exchanges have not fully absorbed this selloff, hinting at a lack of buyers, which could lead to a profound drop in price. 

Ether options
Ether option contracts listed on Deribit, the largest crypto options exchange, rose to a record high of $507 million on Tuesday. This is possibly due to yield farming, the act of putting crypto holdings to work on decentralized applications to earn more crypto, Godbole reports. Open positions in ether options have surged by 45% from $349 million to $507 million over the past five days and nearly doubled since the end of July, while the total value locked (TVL) in the DeFi applications has surged by over 20% to $8.65 billion in the past five days. 

Tech pod

Hypothetical attack
A recently disclosed vulnerability in popular Trezor and KeepKey hardware wallets would have allowed attackers to hold users’ cryptocurrency for ransom without going anywhere near the device, CoinDesk’s Colin Harper reports. ShiftCrypto, the Swiss company that manufactures the BitBox hardware wallet, has disclosed a potential man-in-the middle ransom attack vector that leverages the two wallet’s optional passphrase feature users can use to unlock their device in lieu of a PIN. Trezor has issued a patch, KeepKey has delayed taking action, though it has not been suggested the hypothetical attack has been carried out. 

Op-ed

DeFi, meet CeFi.
Author of “The Business Blockchain,” William Mougayar thinks centralized finance and decentralized finance should link up for each other’s benefit. “CeFi” will bring users and expertise to DeFi – which will struggle to grow beyond its pen of hardcore users – but must begin thinking like wholesalers and hurry to “pick the DeFi products they want to build on top of,” he writes. “The CeFi market potential is staring DeFi in the face. If CeFi exchanges want to start looking more like full-service financial services institutions, they need to become DeFi’s best distribution channels.”

Podcast corner

Policy shift?
Luke Gromen, founder of the Forest for the Trees consulting firm, joins The Breakdown to discuss his thoughts on Jerome Powell’s Jackson Hole address last week. Is this really a change in policy?

Who won #CryptoTwitter?

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Source: https://www.coindesk.com/blockchain-bites-bitcoin-pornhub-twitter-hack

Blockchain

Cryptocurrency Asset Management Provider NYDIG Raises $100M From a Single Investor

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NYDIG, the cryptocurrency asset management company, has raised $100 million from a single investor. The firm collected the amount during its newly-announced fund Digital Assets Fund II, after the previous fundraising project, named Digital Assets Fund I.

$150M In Just Two Crypto Investment Funds

According to officially published documents filed with the U.S. Securities and Exchange Commission, the New York-based digital asset firm revealed that it raised $100 million from only one investor on their recently announced project Digital Assets Fund II.

The operation follows its forerunner Digital Assets Fund I, which raised $50 million from investors in November. The amount has been reportedly collected from just two investors and was to invest mainly in Bitcoin.

The $50 million fundraise in November came after a quadrupling in NYDIG clients. The firm offers investment, brokerage, treasury, and technology solutions for Bitcoin to its institutional allocators, corporations, investment advisors, etc.

Another Publicly-Owned Company to Own a Big Pile of Bitcoin

As CryptoPotato recently reported, less than two months ago, asset manager Stone Ridge bought 10,000 bitcoins worth about $115 million through its subsidiary NYDIG. The new digital assets-oriented investment was reportedly to serve as a primary treasury reserve asset for the company.

Co-Founder and CEO of NYDIG, Robert Gutmann, said that considering that Bitcoin switches to a mainly institutionally-owned asset, “the company has a better position than ever” to be the leading provider of BTC solutions to a variety of banks, corporations, and institutions.

Speaking on the Bitcoin investment, Gutmann also said that the NYDIG is proud to facilitate one of the largest commitments of treasury assets to the cryptocurrency to that date. He added that he sees demand for the company’s full suite of corporate treasury and investment solutions accelerating.

In another significant recent Bitcoin purchase in October, Jack Dorsey’s Square reportedly bought $50 million worth of the most influential and valuable digital asset right now. Thus, it became the second publicly-traded company to do so in recent months after MicroStrategy.

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Source: https://cryptopotato.com/cryptocurrency-asset-management-provider-nydig-raises-100m-from-a-single-investor/

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Blockchain

TrustToken and Syscoin Partner on a Stablecoin Bridge

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Decentralized marketplace and e-commerce protocol Syscoin has partnered with the stablecoin platform TrustToken.

The goal of the collaboration is to speed up payments and to provide further solutions to Ethereum’s blockchain. It also means that the five stablecoins of TrustToken, namely TUSD, TGBP, THKD, TCAD, and TAUD, will run on Syscoin’s blockchain and be available for users.

A Collaboration Between Syscoin and TrustToken

According to a release shared with CryptoPotato, the popular decentralized marketplace and e-commerce protocol Syscoin has teamed up with stablecoin platform TrustToken.

Right off the bat, this means that the stablecoins provided by the platform will now run on Syscoin’s blockchain as well. These are TUSD, TGBP, THKD, TCAD, and TAUD.

Stablecoins have grown in popularity over the past few months, mainly because of the DeFi boom, where they are used to enable staking, liquidity provision, and so forth. However, there was also an obvious challenge with all of it – scaling. Supposedly, Syscoin is intended to help with that. Using Z-DAG (Zero Confirmation Directed Acyclic Graph), the protocol claims to be able to settle transactions in less than 10 seconds with comparatively low fees.

The partnership will also enable users to mine two cryptocurrencies at the same time – SYS and BTC.

Distribution of the Roles

While Syscoin’s task would be scalability, TrustToken comes in for the stablecoin part. It’s a platform that aims at an open financial system through a selection of stablecoins.

The stablecoins it offers are collateralized, and it has also partnered with Chainlink, as well as other protocols.

The overall partnership is aimed at creating a solution for scalable and secure token payments at a lower risk interoperability with Ethereum’s network. It should make TrustToken’s stablecoins function quicker and cheaper following the enabling of the bridge.

Speaking on the matter was Syscoin’s Foundation Chairman Jag Sidhu, who said:

“Digital assets have growing needs for better usability, robust decentralized security, and a scalable way of ensuring every transaction complies with regulations. Syscoin uniquely aligns with all of these requirements. We look forward to TrustToken’s family of stablecoins becoming future-proof and gaining significant advantage with Syscoin.”

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Source: https://cryptopotato.com/trusttoken-and-syscoin-partner-on-a-stablecoin-bridge/

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Blockchain

Visa And BlockFi Partner To Release A Bitcoin Rewards Credit Card

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  • The US-based cryptocurrency lending company BlockFi has partnered with the American multinational financial services corporation Visa to bring Bitcoin to the masses.
  • Bloomberg reported that the two US companies will offer a credit card that rewards clients’ purchases with the primary cryptocurrency, instead of traditional options such as cash and airline miles.
  • Dubbed the Bitcoin Rewards Credit Card, it will allow customers to receive 1.5% of their purchases back in BTC. 
  • Should the user spend more than $3,000 in the first three months after receiving the card, he will be entitled to a bonus of $250 in bitcoin. However, the innovative card will come with a $200 annual fee.
  • Evolve Bank & Trust, a subsidiary of Evolve Bancorp Inc, will be the card’s issuer. All three parties involved plan to launch the card in early 2021.
  • Founder and Chief Executive Officer (CEO) of BlockFi, Zac Prince, commented that his company is “excited to add credit cards to our suite of products and expand Bitcoin’s accessibility to a broader set of customers.”
  • With the BlockFi partnership, Visa has doubled-down on its endeavors with bitcoin-related collaborations. Earlier this year, the US giant and the BTC-friendly shopping app Fold launched a Visa co-branded debit card that rewards users with up to 10% of BTC back for every dollar purchase on retailers like Hotels.com, Nike, Starbucks, and Uber. 
  • BlockFi raised $50 million in Series C funding earlier this year, and Morgan Creek Capital’s Anthony ‘Pomp’ Pompliano joined its board of directors.
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Source: https://cryptopotato.com/visa-and-blockfi-partner-to-release-a-bitcoin-rewards-credit-card/

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